Momentum (technical analysis)
The Momentum (English for force, momentum, impulse ) refers to a concept for measuring the strength of a price movement in the chart analysis. For this, the price change is measured within a certain period in various ways.
Momentum Indicator
The technical indicator name " Momentum" (often abbreviated as MOM ) represents the absolute price difference between two points in time and thus corresponds to the difference quotient, multiplied by the constant factor n The indicator should provide information about the strength or weakness of the trend.
The indicator is calculated using the following formula:
The following events are signaled:
- An existing trend is accelerating: Momentum is positive and increasing
- An existing uptrend is braked: Momentum is positive and decreasing
- An existing downward trend is accelerating: Momentum is negative and decreasing
- An existing downtrend is braked: Momentum is negative and increasing
Rate -of -Change ( ROC)
The rate -of -change indicator is virtually identical to the momentum indicator, only the relative price differences are used here.